Looking for a job is work in itself. There's the hustling for interviews, the following up on leads -- and the constant polite smiling and genial small talk as you meet potential employers. That's no easy job.
But you can be rewarded quite nicely for your toil. Sure, there's the long-term rewarding career, but the IRS will also give you some decent deductions if you're spending your hard-earned money looking for work. If you choose to itemize deductions rather than take the standard exemption, you can write off the costs of your job search. Since it's a miscellaneous deduction, it's subject to the 2 percent limit, which means that you have to have combined miscellaneous deductions greater than 2 percent of your adjusted gross income to begin writing them off. But if you qualify, it could pay off.
Let's not get ahead of ourselves though. First, we'll review a few rules about our common job-search deductions.
10: Them's the Rules
Although the IRS has some downright generous deductions for your job search, they do come with strict rules. So let's make sure your job-search expenses qualify before we carry on.
First, your job search can't be in a new occupation. That means two things: It can't be your first job, and it must be in the profession in which you already work. So if you're looking for deductions, now is not the time to abandon your massage therapy career to explore the world of artisan plumbing. (Frankly, there may not ever be a good time for that.)
You also can't have a "substantial" break in employment between your last job and the new one you're searching for. Note that the IRS doesn't provide a definition of "substantial," but better not go running off for a French sabbatical to recharge the batteries if you want to grab those write-offs.
Now that we know you qualify for job-search expenses, let's dive into what you can write off. You should be delighted to know that -- despite being everyone's least favorite job-search task -- your resume is a perfectly acceptable deduction. No, not the cost it took to build your experience and qualifications -- you can't write off the summer you worked the drive-through window at your local fast-food joint. But the usual costs you probably associate with resume preparation are all included in the deductions. Printing, mailing -- heck, if you hire someone to spell-check it -- you can write it off.
Unfortunately, that doesn't mean you can pay someone to agree to pad your resume with fake references and try to deduct the cost. But if someone helps you develop or prepare your resume, by all means mark it down.
8: Employment Placement or Interview Prep
Getting a new job has never been a walk in the park, and finding yourself in an especially turbulent market can be even more daunting. You might realize that simply standing on a street corner and asking for work just isn't going to cut it and decide to hire an employment or temp agency to help place you in a suitable field. These services don't come free, so it can be a difficult decision for some. Accept a leg up for a fee, or risk it -- cheap and alone?
Don't fuss for too long. When you realize that any fees you pay to a person or organization to help you find a job are write-offs, you might be even more excited to get some career help. It doesn't just stop there: Do you fear the moment a potential employer asks you to list your weaknesses? You can also deduct the cost of any interview prep you pay for to learn how to dazzle your interviewers with your spot-on replies.
Even if you do hire some outside help to find new work, that doesn't necessarily mean you get to kick back and let the job offers roll in. You still might find it useful to advertise your services and get your name out there.
While it's probably not wise to take this tax write-off if you hire an airplane to trail your resume and references on a banner in the sky, you can deduct the costs of advertising or marketing yourself for a new job. And now is as good a time as ever to remind you that the IRS isn't crazy; the agency will want to make sure you're spending reasonable amounts on all these job-search costs. (Think more along the lines of "putting an ad in the local weekly," less "paying for a gigantic billboard you can see from the freeway.")
6: Telephone and Legal Services
Even in this digital day and age, a lot of employers will ask you to do a phone interview before they're ready to commit to a day of shaking hands and introducing you around the office. And even that phone call is a write-off, as long as you have some way of keeping track of how much it cost you.
Keep in mind that any calls you make to look for jobs or interview can be included in the job-search deduction. So if you're calling around all over town to see if anyone can use a worker, you can write off the cost. And remember, that might mean phone consultations with a job agency or headhunter, too.
And while it comes after a job offer, don't forget that you can also deduct the cost of a lawyer you hire to look over a job contract -- even if you're just doing an over-the-phone consultation.